AGENDA

600 NORTHEAST GRAND AVENUE PORTLAND, OREGON 97232-2736

TEL 503-797-1700 FAX 503-797-1797

MEETING:  Rate Review Committee, MEETING 2

DATE:  Thursday, March 15, 2007

TIME:  6:00 – 7:30 p.m.

PLACE:  Metro Regional Center, Room 270

PROPOSED AGENDA

I.  Call to Order (5 min)  Rod Park

○  Welcome

○  Approval of Meeting Summary from the February 27, 2007 RRC meeting *

II.  Introduction to FY 2007-08 Data and Assumptions (30 min.)  Douglas Anderson

The technical context for discussion of next year’s rates.

○  Tonnage and transaction trends and the FY 2007-08 forecast;

○  Revenue requirements of the FY 2007-08 Proposed Budget;

○  FY 2007-08 unit costs under the current rate model and allocation policies;

○  Factors affecting the rates over the next 3 years.

Materials for this agenda item will be distributed in a separate mailing before the meeting.

III.  FY 2007-08 Rates (45 min.)  Rod Park/all

Discussion of factors, policies and practices affecting FY 2007-08 rates.

Optional action: recommendation(s) on FY 2007-08 rates.

IV.  Other Business and Adjourn (5 min.)  Rod Park

Next meeting: Thursday, April 5, 6:00 p.m., Room 270.

* Starred (*) items are included with this agenda. Other materials will be distributed at the meeting.

All times listed on this agenda are approximate. Items may not be considered in the exact order listed.

Please contact Tom Chaimov at Metro with any questions at chaimovt@metro.dst.or.us or 503-797-1681.

TC:mb

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List of Attachments

Agenda Item II  Introduction to FY 2007-08 Data and Assumptions

Materials for Agenda Item II will be distributed in a separate mailing before the meeting.

Dinner Provided

Dinner for this evening will consist of a variety of Chinese cuisine:

Beef and Broccoli

Mixed Vegetables

Kung Pao Chicken

Steamed White Rice

Assorted Sodas

T:\Remfma\committees\Rate Review Committee\FY 07-08\Agenda & Minutes\RRC031507aga.doc

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MEETING SUMMARY

Rate Review Committee

Metro Regional Center – Room 270

February 27, 2007

Present:

Members  Metro  Guests

Councilor Rod Park, Chair  Councilor Kathryn Harrington  Dave White, ORRA

Matt Korot  Doug Anderson, Office of the CFO  Dean Kampfer, Waste Mgmt.

Ray Phelps  Tom Chaimov, Solid Waste & Recycling  

Mike Miller  Jim Watkins, Solid Waste & Recycling

Mike Leichner  Jim Quinn, Solid Waste & Recycling

Michelle Poyourow  Joel Sherman, Solid Waste & Recycling

 Melissa Bergstrom, Administrative Assistant, Solid Waste & Recycling

Members Absent:

Paul Matthews

I.  Call to Order (Rod Park)

The meeting was called to order at 6:05 p.m. Councilor Rod Park welcomed the members and guests. He reviewed the agenda and introductions were made. The time was turned over to Tom Chaimov, Metro.

II.  Last Year Review and this Year’s Work Plan (Tom Chaimov/Rod Park)

Mr. Chaimov reviewed “Attachments A and B,” summaries of the previous year’s issues and recommendations of the Rate Review Committee (RRC) to the Metro Council; and a report on the split transaction fee. Mr. Chaimov gave a background of the work that was completed by the Rate Policy Subcommittee which brought about the recommendations. The subcommittee recommended changes to self haul and sustainable purchasing policies. The recommended policy on self haul was to be neutral, neither encouraging nor discouraging self hauling to the Metro transfer stations. The policy on sustainable purchasing was to boost market development, and fund Metro’s costs generally (from the Regional System Fee) until sustainable purchasing is widely adopted. The Metro Council adopted both recommendations within the FY 2006-07 rates. The sustainable purchasing policy was implemented by re-allocating the additional costs of sustainable products (above the costs of alternatives) from the tonnage charge to the Regional System Fee. The self-haul policy was implemented through a split transaction fee; this charge was designed to reflect the cost of service. One anticipated response of the split transaction fee was to shift customers from using the scalehouses to using the automated scales. Based on the five months during which the split transaction fee has been in place (September to January—the latest month data are available), there has in fact been a mild shift of customers from the scalehouses to the automated scales. There was further discussion regarding the cost of credit card use, and implications for the Enhanced Dry Waste Recovery Program (“Mandatory MRFing”).

The group discussed the possibility of further adjusting the transaction fees to increase the incentive to switch to the automated scales. They recognized that an arbitrary price adjustments could be construed as a shift from the neutral (cost-of-service) recommendations. Some of the group asked about adjusting the transaction fees to reflect the actual shift to automated scales more accurately. Mr. Chaimov commented that the original rate design anticipated some shift, and that the intended revenue is very close to target. The group discussed some of the possible changes that may occur when the Enhanced Dry Waste Recovery Program is implemented. The group agreed to revisit this issue after there has been a year’s worth of transaction data and after the Enhanced Dry Waste Recovery Program has been implemented when there is sufficient data on how this will affect the composition of disposal loads.

Councilor Park turned to the 2007 work plan and meeting schedule. He said the committee was able to accomplish a lot of work through the Rate Policy meetings last year. This year it would be nice to reap the benefits by having fewer meetings. He reviewed the proposed meeting schedule and asked for any changes or possible topics the committee may want to address. The group agreed to the proposed meeting schedule.

Some of the issues that the group would be interested in revisiting in the future include:

•  Bulky waste and how policies affect illegal dumping.

•  Possibly recommending having a “one stop shop” for the public to access name of hauler and a link to hauler’s website on Metro’s Recycling Information website.

•  RRC purpose, role, scope and composition.

•  Rate path management ahead of upcoming changes (e.g., new transport contract; retirement of the bonds).

•  Review and comment on Metro’s rate criteria, and recommend changes as needed.

•  Placeholder to discuss the impact of the Enhanced Dry Waste Recovery Program.

•  Scope of Disposal System Planning, Phase II (“DSP II”), (e.g., caps, location of transfer station).

Councilor Park reviewed the results of Disposal System Planning, Phase I. Metro will stay in the transfer station business. It was a good exercise to lay a foundation for DSP II, which will look at optimizing the current system. Mr. Ray Phelps commented that the current draft of the Regional Solid Waste Management Plan gives preferential consideration to a public solution on the siting of additional transfer stations as opposed to a fair and balanced approach of who or what could deliver the best service.

From the audience, Mr. David White raised his concern that we are not correctly defining the service that the self haulers are getting. The new Enhanced Dry Waste Recovery Program (“EDWRP”) will require the commercial haulers to go to a MRF and the self haulers will be able to go to Metro and not be required to process their loads. Metro should improve their facilities or let materials go to facilities that can handle it. Self haulers need to begin getting processing services. Someday the self haulers should have a higher tip fee in order to raise capital investment funds to improve Metro facilities. Metro staff pointed out it would also involve a change order to break out Allied’s costs for processing from the other costs of operating the transfer stations. Nonetheless, the discussion continued, a higher transaction fee would be justified to recover the (higher) costs of processing self-hauled waste.

The group continued to discuss self haul and EDWRP. From the audience, Mr. Dean Kampfer, Waste Management, expressed that the way the EDWRP ordinance is written the private facilities don’t have the choice as to whom they can exclude in terms of customer types. Mr. Kampfer referred to Hillsboro landfill where they take a large number of self haulers. Mr. Phelps stated that Allied’s franchise can only accept commercial haulers. Some of the committee members were concerned that contradictory statements had been made in the past two years regarding whether Allied can take self haulers or not. Mr. Phelps referred them to his franchise agreement.

The group continued its discussion of the concept of “cost of service.” It is true that the split transaction fees were designed to recover the cost of service, but they reflect services as currently provided. However, changing the level of service would change the transaction fees, and still satisfy the cost-of-service policy. The main example was Mr. White’s regarding an increase in processing of self-hauled waste for recoverable materials. Furthermore, the discussion continued, since MRFing is not a “service” generally available to self-haulers (except at one or two facilities in the region), this will raise an equity issue when the Enhanced Dry Waste Recovery Program aka Mandatory MRFing is implemented.

Mr. Mike Leichner asked if there was a way to get the demographics of self haulers so we can understand how to get them into the system.

Overall the schedule looks okay and the next meeting will be devoted to a presentation of the numbers, and a discussion of recommendations for the Regional System Fee, tonnage charge, and transaction fees.

III.  Household Hazardous Waste Charges (Jim Quinn)

Councilor Park turned the meeting over to Jim Quinn, Metro, to present the arguments for and against charging for the Household Hazardous Waste (“HHW”) disposal. Mr. Quinn distributed bullet points that summarized Agenda Attachment D. These bullet points are included as an exhibit at the end of this summary.

Mr. Phelps added the most compelling reason (to him) for capturing HHW is the safety of solid waste industry workers—drivers and transfer station workers. There was general agreement this should be included in Mr. Quinn’s final report.

The group discussed Mr. Quinn’s presentation. The committee members discussed the pros and cons of a HHW fee. Members felt that education is needed. The proposed $5-10 fee would not be worth the tradeoffs of administration costs, ineffective message, human safety, and increased risk of improper disposal. Additionally, the proposed fee may not pay for itself. Mike Miller, Gresham Sanitary, stated that without a more comprehensive educational effort and taking the HHW out of the waste stream the cost of disposal should remain absorbed in the regional system fee. The consensus was in favor of changing the Metro Code to eliminate the HHW fee at the permanent facilities and the neighborhood events.

Mr. Phelps made a motion to that effect, and added that the Metro Council should, to the extent possible, encourage product stewardship funding for HHW disposal and education programs. In addition, the endorsement of product stewardship should be reflected in the Regional Solid Waste Management Plan. The motion was seconded and approved unanimously by voice vote.

Councilor Park adjourned the meeting at 7:47 p.m.

Next meeting: Thursday, March 15, 2007

6:00 p.m. Room 270

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Attachments

T:\Remfma\committees\Rate Review Committee\FY 07-08\Agenda & Minutes\RRC022707min.doc

Exhibit to Meeting Summary

Should Metro charge a fee for HHW services?

Arguments in Favor of a Fee:

•  It would provide an additional source of revenue for the collection program. If all HHW customers were charged $5, and no reduction on usage occurred, this would raise about $300,000 annually. If the fee were $10, with no reduction in usage, this would raise about $600,000 annually.

•  It would communicate a message to customers regarding the cost of managing HHW, and could help foster waste reduction.

Arguments Against a Fee

•  There are significant administrative costs for collection and handling of money. The estimated labor cost of collecting an HHW fee in the permanent facilities is about $168,000 annually. Fee collection at the HHW roundups adds additional difficulties, such as the need for dedicated cash handling staff, and frequent armored car service.

•  The message communicated to the public may not be the right one. Customers may believe that the fee covers the entire cost of handling their load, even if it only covers a fraction of the cost. There are better ways to deliver a message about the cost of managing HHW and encourage waste reduction.

•  A fee would probably increase the risk of improper disposal. Many residents would also store their waste longer. Both of these would increase the risk of health and environmental impacts due to hazardous products.

•  Stakeholders in the RSWMP process expressed a preference for paying through up-front fees as a part of product stewardship programs, as opposed to paying at the point of disposal.

•  Very few other HHW programs around the country charge a fee. Clearly the consensus among program mangers is that the potential benefits are outweighed by the problems.